BY LINDA BENTLEY | MAY 22, 2013

Town settles attorney fees, restructures WIFA loans

Esser stated, ‘I certainly support this … After listening to the crowd, I’m not concerned about what you do in Pennsylvania or Hawaii’

CAVE CREEK – Councilman Steve Lamar arrived late to Monday’s meeting and since he wasn’t involved in the discussion, he didn’t vote on the agenda item to approve $4,000 in attorneys’ fees to settle the case CV2013-002769 (Freeman v. Esser et al.) in full.

Although Councilman Jim Bruce was absent and Councilman Dick Esser had recused himself, there was still a quorum present.

During public comment, Kerry Smith said, “I don’t understand why the town is paying this.”

Town Attorney Fredda Bisman explained the settlement was suggested by Attorney Jeff Murray, who represented the town in the matter, and said the reason the town is paying is because the judge ordered the attorneys’ fees against the town.

The original fees submitted to the court exceeded $7,000.

After Councilwoman Shelley Anderson confirmed the $4,000 settlement would finalize the case, council voted unanimously to authorize the settlement.

Council then voted unanimously in favor of the second reading of the ordinance designating a citizens’ water advisory committee.

Anderson in moving to approve the item, reminded citizens she never wanted the committee to go away and said it will be a useful tool for the town and for the Desert Hills water customers.

Utilities Manager Jessica Marlow (r) and Finance Director Robert Weddigen (r, on left) brought forward the second reading of an ordinance relating to the refund of water account deposits.

Marlow said it would take several months to process the 400-500 checks initially for those eligible (water customers who have not defaulted on their payments over the past 12 months) to have their deposits refunded.

During public comment, Adam Trenk said he thought it was a great idea but was concerned about “how it will pan out against our WIFA ratios.”

Marlow explained security deposits are not included as part of the utilities revenue and do not affect WIFA.

Smith said, “I’m still a little concerned how we’re going to deal with renters.”

Marlow stated the town did not have a lot of customers walking away.

Smith said renters didn’t have a commitment to the community.

Mayor Vincent Francia posited treating renters differently was a form of discrimination and asked, “Are we saying people who rent have no commitment to the community?”

Smith said if it was just a small amount, it wasn’t worth having a mechanism in place.

Francia wanted to ensure the deposits were being accounted for separately and said he would like the town to desist from turning off water to deal with delinquent accounts.

Councilman Thomas McGuire’s motion to approve the second reading, with the provision deposits have a separate accounting, passed unanimously.

Fred Rosenfeld (r), the town’s bond attorney, explained the next two agenda items, resolutions to restructure one of the town’s WIFA (Water Infrastructure Finance Authority of Arizona) loans into two separate loans to enable the town to meet the excise tax and water utility revenue ratio requirements.

Rosenfeld provided a history of the loan and said the town has already met its reserve requirement and will not have to add to it.

Because the loan requiring guarantees from excise tax is $7.6 million less than the previous loan, Rosenfeld said it is “a much smaller nut to crack.”

Anderson asked if the restructuring extended the term of the loan.

Rosenfeld said it did not. He said the original 2007 loan was for 20 years and the new loans are for 15 years.

Rosenfeld said it would be beneficial for the town to close the loans in this fiscal year so it can use last year’s excise tax.

During public comment, Eileen Wright, who preliminary election results indicate has lost her bid for a council seat, said the loan is a major financial transaction, the loan document is 80 pages long and it had not been vetted by the public.

She asked the town to wait two more weeks until the new council is seated.

Wright expressed concern about the “unilateral authorization of the mayor and town manager” to execute the loan documents and asked that it be removed.

Rosenfeld explained the authorization allows for minor edits and said if so much as a coma is removed, they would be unable to close, plus they will not have the final numbers, which is why the authorization was expressed in amounts “not to exceed,” until WIFA meets on Wednesday.

He said there were reasons the town needed to have some discretion.

Mike Chutz said, “This is really annoying to me,” and accused Rosenfeld of “massaging the fact this is in default.”

He said, “WIFA has a gun to our head. We overpaid for this thing … I want a perfect document in front of me.”

Chutz reiterated the notion the town was “massaging this thing when we’re in default,” and said it was “highly inappropriate.”

Charles Spitzer stated there were three drafts of the loan documents and asked council which one they read. He said without redlining the changes it was hard to know what had changed.
Spitzer asked, “How can you vote on something you haven’t read?”

Rosenfeld, who has been involved with WIFA for over 40 years, told council if it wanted to have a final draft, it would have to set a special meeting for the last Thursday of the month. He also stated they do not receive redlines from WIFA.

He said if the town wanted redlines he could have his secretary provide them but it would be time consuming and expensive.

LaMar moved to approve the resolution and stated it was simply a matter of splitting the loans. “We need to do the town’s business and we need to do it right.”

Bunch said, “Breaking them apart like this makes sense,” and taking umbrage with Chutz’s insinuation that the town was in default on its loans.

Bunch stated the town has never missed a payment but because of the downturn in the economy, which no one could have predicted, the ratios could not be met and the restructuring of the loans corrects that.

McGuire asked if WIFA had any concerns about the town meeting the terms of the new loans.
Rosenfeld said they did not.

Esser stated, “I certainly support this,” and said, “After listening to the crowd, I’m not concerned about what you do in Pennsylvania or Hawaii,” which was apparently aimed at Chutz, who lives in Pennsylvania and was unable to deliver on a contract with the city of Honolulu for the removal of garbage from the island.

Rosenfeld said WIFA would not have made the recommendation had the town not been solidly meeting all the other conditions of the loan.

Bunch reiterated in moving to approve the resolution, “We have the money to pay these loans, it only has to do with ratios,” which he called out as bureaucratic.

Esser, in seconding the motion, commented, “The town has never been on the brink of insolvency.”

Council voted unanimously to pass both resolutions.

Town Engineer Wayne Anderson introduced the next agenda item to award a bid and contract to Everett Alan Group in the amount of $18,900 for the design of the Bella Vista Loop Road.

Planning Director Ian Cordwell provided a brief history and said, “The money is in the budget.”
He also let council know the firm conducting the transportation framework study has been made aware of the Bella Vista Loop.